The average pension in the Dominican Republic will be 22.8% of salary

SD. In the Dominican Republic, workers who begin work today, with average income throughout their lives, will receive a pension equal to 22.8% of their income during their working life, according to a recent report released yesterday, Monday, by the Inter- American Development Bank (IADB), the World Bank and the Organization for Cooperation and Economic Development (OC DE).

This amount of the pension for workers with average income consists in the gross rate of replacement, defined as a level of pensions at the moment of retirement in relation to the income during the working life.

In this way, the Dominican Republic falls, together with Haiti, Mexico and Surinam in the “extreme bottom,” among the 26 countries of Latin America and the Caribbean (ALC), for which the regional average is 62% of salary. While at the crown of the very top (a pension greater than 90% of average salary of the working life) are Ecuador, Nicaragua, Paraguay and Venezuela, which are underlined in the report titled “A Panorama of Pensions: Latin America and the Caribbean,”, released on Monday in Washington by the three multilateral agencies.

However, at the present time, the greatest challenge for pension policies in the Latin American and Caribbean region is the low coverage of the pension systems, both in terms of the proportion of workers who participate in the pension systems as well as the proportion of elderly persons who receive some type of pension, according to the report.

It is noted that the efforts to close the gap in terms of coverage through the non-contributive pensions, are at the center of the debate regarding pension policies in the region, but that these policies could mean significant fiscal challenges in the coming decades due to the aging population.

According to the EFE Agency, upon releasing the report, the president of the IADB, Luis Alberto Moreno called the handling of pensions “the principle challenge” for constructing a system of social protection in the long term.

He underlined the urgency of the reforms since the portion of Latin Americans older than 65 will go from the current 7% to nearly 20% in 30 years, but at the present time only 45% of the workers contribute to a pension plan.

“Without reforms, between 63 and 83 million persons will not have a pension,” warned Moreno, according to EFE. “At this time we are enjoying a demographic bonus that we cannot fail to take advantage of,” he added.

In the meantime, Mexican Angel Gurria, the president of the OCDE, pointed out that at the present time Latin America has eight persons at a productive age for each pensioner, but the rate will fall to 2.5 in 2050.

The study concludes that the countries of Latin America and the Caribbean are trying to deal with the problems of coverage in different manners, but that the tendency is evident and the policy which seems to be having the greatest impact is the extension of the social pensions.

“This change in policy has important implications in the long term in those countries where the population is aging,” he indicated.